May 4, 2015

Insurance Industry Learns How To Play the Game

A smart insurance company can learn what makes
potential customers motivated and use those elements in much the same
way that a video game designer does

If ever there were an industry that could use some outside-the-box thinking, it's the insurance sector. Little has changed in this business for centuries. Well, I have good news for you if you think insurance companies are all boring and thrive on the status quo. Some of the smart firms in this industry are using gamification to reach the vast, yet barely penetrated, middle market across the United States.

For years insurance companies have struggled to reach this lucrative market. It turns out that the same thinking that goes into designing exciting video games is helping them sell distinctly unexciting insurance policies.

One of the best treatises on gamification comes from two professors at the Wharton School of Business. They've published a new book called For the Win: How Game Thinking Can Revolutionize Your Business. Kevin Werbach and Dan Hunter challenge business leaders to think like video game designers when they're confronted with the challenges of running an organization.

At the end of the day, people associated with your organization - whether employees or customers - should be having fun, according to the authors. Such an atmosphere leads to more innovation, creative thinking, and heightened efficiency across an enterprise - even in the insurance industry. The two authors recently sat down with their campus publication, Knowledge@Wharton, to discuss some of the finer points of bringing gamification into the workplace.

"We've gotten really good in business at squeezing out operational efficiencies, and we have all this technology," says Werbach. "The baseline has been raised to the point where just doing those things - just being efficient - isn't a differentiator. What's a differentiator? It's human beings; it's engagement and enthusiasm. Games, we found, are the key to understanding some of the techniques to motivating people in powerful and differentiating ways."

We all know what a game is and we probably have a short list of our all-time favorites. But just how many people know what gamification involves? According to the two authors, it's about taking what we understand about games and putting it to good use. Video game designers, the masters of a $70 billion global industry, are experts at knowing which elements go into the most popular and enduring games. The reasoning goes that a smart insurance company can learn what makes potential customers motivated and use those elements in much the same way that a video game designer does.

If you have teenage children, you know that the video games they become obsessed with are all very similar. Designers of those games have perfected their formulas for each and every element that goes into a blockbuster. What insurance companies are doing is figuring out the winning formula for game-like challenges that encourage potential customers to become engaged. Doing so has tremendous benefits for the largely untapped middle market.

What appeals to me is that gamification is an efficient first step to a greater understanding of customers in the insurance industry. You can use light-hearted, fun techniques to take consumers through various scenarios and judge where and how to engage with them as a next step. Better still is that the next step will be significant to the consumer. You've gotten to know her preferences and won't be perceived as wasting her time when asking for preliminary information. Thanks to gamification techniques, you'll already know it.